CHAIRMAN S REPORT. Financial Performance. Economic Outlook. Industry Update

Transcription

1

2

3 CHAIRMAN S REPORT It gives me great pleasure to present your company s Annual Report for the 2018 year. The operating results for the year ended 30 June 2018 reflect the prudent management of the company s affairs over the year. Financial Performance The financial year provided challenges over and above those that are part of the highly competitive Fijian business environment and more so for the supermarket industry. I address some of the issues later in this report. Same store turnover increased by 1.5% over last year with no change in the number of stores. Gross profit on sales increased slightly to 20% from 19.8% last year. RB Patel continues to emphasise the level of profitability within the competitive supermarket industry. This is a reflection of the importance management places on the policy of pricing of products and control of operating costs. The company operates 10 stores located in Nausori, Nasinu, Suva, Lami, Sigatoka, Nadi, Lautoka and Labasa. Other income, mainly consisting of rent income, increased by 5.3% over the same period. Operating profit before tax increased by just over 1%. Profit for the year after tax at $9.7 million was an increase of 13.9% over last year. This significant increase is due mainly to the increase in fair value of our investment properties by $1.5 million over the last financial year. 12 months ended 12 months ended 12 months ended 30 June June June 2018 Revenue including other income $117,672,362 $122,914,461 $124,847,540 Growth 9.5% 4.4% 1.6% Profit for the year (before tax) $8,209,633 $9,439,187 $10,747,282 Growth 24.7% 15.0% 13.9% Profit for the year (after tax) $7,351,154 $8,481,833 $9,662,522 Growth 24.2% 15.4% 13.9% Dividends per share 15 cents 16 cents 17 cents Earnings per share 25 cents 28 cents 32 cents Your Board proposed a final interim dividend of 12 cents per share bringing the total dividend declared and paid or proposed for the year to 17 cents per share; an increase of 6.25% over last year. Your company s share price at the end of the year was $4.85, an increase of over 47% on the price last year of $3.29. Shareholders have therefore seen a total market return of just under 53% for the financial year. A remarkable year for you the shareholders. Economic Outlook The Fijian economy continues to demonstrate above par growth boosted by tourism in particular and has seen a marked reduction in poverty levels. Although fiscal debt has increased, it is still comfortably serviceable. With the forecast for growth of the Fijian economy at 3.0% and 2.9% for the years 2018 and 2019 respectively the company is optimistic for the future and these forecasts provide greater confidence in the Fijian economy. Government s 2019 budget announcements continue their expansionary policies and our industry should again benefit from the impetus this will provide in the economy. Industry Update During the year, our industry went through some major transformation in terms of point-of-sale systems and reporting processes. The company successfully implemented the VAT monitoring system by June 2018 with only some technical matters being addressed by FRCS and the software suppliers. 01

4 CHAIRMAN S REPORT (Cont d) Once the VAT monitoring system becomes part of the Fiji Revenue & Customs Services audit process we are confident that all participants in the industry will operate on a level playing field. The company continued to invest in store improvements with investments in technology and equipment. Major improvements were undertaken in our Nasinu, Nakasi, Sigatoka and Lautoka stores together with our distribution warehouse in Nasinu. Expansion and Growth Construction works on the three level car park and retail space building at our JetPoint Complex in Martintar Nadi continued with expected completion being October The eight residential apartment s development in Suva will now be completed in late During the year, your directors approved the construction of a three storey commercial building at the JetPoint complex in Martintar, Nadi. The building is expected to cost $12 million. Further developments are planned on our current properties at HarbourPoint, Lami and Tamavua in Suva. Customers and Service The continuous investments to renew and refresh our stores is essential to ensure that they are the right size and type to meet current and future market conditions and customer needs. We make it easy! Save money, Save time, Great range, continues to be our driving force. Our employees continuously ensure that the our core commitment to deliver value for money in all our stores is evident in all we do. Providing the most affordable and attractive range of products continues to drive our purchasing plans. Future Outlook RB Patel opened its last store in 2012 in Lami and we are delighted to announce that a new store will be opening in the new FNPF complex in Nadi town in This will take the number of stores to eleven. Our search for growth opportunities continues and your Directors are continuously assessing sites and properties that will benefit the company and its shareholders. There is continued confidence in government s policies as is evident from the increase in investments in Fiji and we are certain that this will continue to provide the impetus for future growth. Your company will continue with its expansion plans as opportunities for further investments are identified. Staff and Management I take this opportunity to thank the staff and management for their commitment and effort during the year. These outstanding results would not have been possible without their joint efforts. I would also like to thank my fellow directors for all their effort, dedication and counsel over the year.... Chairman 02

5 CORPORATE GOVERNANCE The RB Patel Group Limited (RBG) Board acknowledges the requirement to report on the company s Corporate Governance Code under the principles and guidelines provided by the Capital Markets Unit of the Reserve Bank of Fiji. In line with the 10 core principles and the best practice recommendations RB Patel Group Limited has developed policies to improve the standard of Corporate Governance in the company. These policies are reviewed periodically to incorporate new developments in good corporate governance principles. Principle Establish clear responsibilities for board oversight Constitute an effective Board Appointment of a Chief Executive Officer Board and Company Secretary Timely and balanced reporting Promote ethical and responsible decision-making RBG comments The RBG Memorandum & Articles of Association set out the powers and duties of directors in terms of managing the company effectively and efficiently. The company continuously reviews its policy guidelines to strengthen the oversight role. Directors are selected for their experience and competencies and are inducted and evaluated on the basis of their suitability for the Board. The board comprises of six directors of which two are independent directors as defined by the SPSE listing rules. The Board has appointed Audit & Risk and Human Relations subcommittees both of which have their own Charter and have met during the year to review and report to the Board on matters covered by their respective Charters. RBG has a Management Agreement with FHL Retailing Limited (the holding company) under which operations of the company are managed. Executive appointments are made under this framework by the Board. The Company Secretaries maintain a close link with the Board and executive officers and the company to ensure all duties and responsibilities are effectively discharged. Board meetings are held at least quarterly to update directors on the company s performance and to review and provide approvals and confirmations of major aspects of the operations of the company. Directors receive monthly financial statements and commentary on performance. RBG guides its directors and other officers through its policies and code of conduct in making ethical and responsible decisions. 03 Register of interests Respect the rights of shareholders Accountability and audit Recognise and manage risk Directors and officers of the company are obliged to disclose any conflicts of interest that may arise in the course of the business. The interests of directors, if any, are noted during meetings of the company s Board. Shareholders are encouraged to participate at the Annual General Meeting of the company. The company s Annual Report is forwarded to shareholders so as to allow adequate time to review the performance of the company and seek clarification on any aspects of the company s performance for the year and forecasts for the future. RBG is audited annually by independent auditors who provide their report to the shareholders. Regular internal audits are also conducted and reported in line with established company procedures. RBG has established risk management procedures and practices to identify and manage operational and industry risks together with appropriate controls and procedures to manage these risks.

6 CORPORATE GOVERNANCE (Cont d) The Board sub-committees, chaired by non-executive directors, consist of the following members: Audit & Risk Sub-committee Malakai Naiyaga (Chairperson) Nouzab Fareed Saleshni Prasad Human Relations Sub-committee Litiana Loabuka (Chairperson) Kaliopate Tavola Abilash Ram The Audit & Risk and the Human Relations subcommittees both met during the year and reviewed and discussed matters in line with their respective Charters. 04

7 05

8 DIRECTORS REPORT In accordance with a resolution of the board of directors, the directors herewith submit the statement of financial position of RB Patel Group Limited (the company) as at 30 June 2018, the related statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended and report as follows: Directors The names of the directors in office at the date of this report are: Iowane Naiveli - Chairman Nouzab Fareed Malakai Naiyaga Surendra Kumar Patel Kaliopate Tavola Litiana Loabuka Principal Activities The principal activities of the company during the year were that of retailing and wholesaling of general merchandise, owners and administrators of properties and equity investments. The company operates supermarket stores in Nausori, Nakasi, Nasinu, Suva, Sigatoka, Nadi, Lautoka, Labasa and Lami. There were no significant changes in the nature of these activities during the financial year. Results The results for the year are as follows: Profit from operations $ 10,062,232 9,978,827 Finance income 117,635 79,212 Finance costs (932,585) (903,352) Change in fair value of investment properties (note 14) 1,500, ,500 Profit before income tax 10,747,282 9,439,187 Income tax expense (1,084,760) (957,354) Profit for the year $ 9,662,522 8,481,833 Dividends During the year, the company declared and paid an interim dividend of $1,500,000 (2017: $1,500,000). Furthermore, during June 2018, the directors proposed the payment of a final interim dividend of $3,600,000 from the profits for the year ended 30 June 2018 (2017: Proposed dividends of $3,300,000). Total dividends declared and paid or proposed for the year ended 30 June 2018 amounted to $5,100,000 (2017: $4,800,000). Reserves The directors recommend that no transfer be made to or from reserves except for movements required under International Financial Reporting Standards. 06

9 DIRECTORS REPORT (Cont d) Basis of Accounting - Going Concern The financial statements of the company have been prepared on a going concern basis. The directors consider the application of the going concern principle to be appropriate in the preparation of these financial statements as they believe that the company has adequate funds to meet its liabilities as and when they fall due over the next twelve months. Bad and Doubtful Debts Prior to the completion of the company s financial statements, the directors took reasonable steps to ascertain that action has been taken in relation to writing off of bad debts and the making of allowance for impairment loss. In the opinion of directors, adequate allowance has been made for impairment loss. As at the date of this report, the directors are not aware of any circumstances, which would render the amount written off for bad debts, or the allowance for impairment loss in the company, inadequate to any substantial extent. Current and Non-Current Assets Prior to the completion of the financial statements of the company, the directors took reasonable steps to ascertain whether any current and non-current assets were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the company. Where necessary, these assets have been written down or adequate allowance has been made to bring the values of such assets to an amount that they might be expected to realise. As at the date of this report, the directors are not aware of any circumstances, which would render the values attributed to current and non-current assets in the company s financial statements misleading. Unusual Transactions In the opinion of the directors, the results of the operations of the company during the financial year were not substantially affected by any item, transaction or event of a material unusual nature, nor has there arisen between the end of the financial year and the date of this report, any item, transaction or event of a material unusual nature, likely in the opinion of the directors, to affect substantially the results of the operations of the company in the current financial year. Events Subsequent to Balance Date No matters or circumstances have arisen since the end of the financial year which would require adjustments to, or disclosure in the financial statements. Other Circumstances As at the date of this report: (i) (ii) (iii) no charge on the assets of the company has been given since the end of the financial year to secure the liabilities of any other person; no contingent liabilities have arisen since the end of the financial year for which the company could become liable; and no contingent liabilities or other liabilities of the company has become or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the company to meet its obligations as and when they fall due. 07

10 DIRECTORS REPORT (Cont d) As at the date of this report, the directors are not aware of any circumstances that have arisen, not otherwise dealt with in this report or the company s financial statements, which would make adherence to the existing method of valuation of assets or liabilities of the company misleading or inappropriate. Directors Benefits Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than those disclosed in the financial statements as emoluments, fees and incentives) by reason of a contract made by the company or by a related corporation with the director or with a firm of which he / she is a member, or with a company in which he / she has a substantial financial interest. For and on behalf of the board and in accordance with a resolution of the directors. Dated this 15 th day of August Director Director 08

11 DIRECTORS DECLARATION The declaration by directors is required by the Companies Act, The directors of the company have made a resolution that declares: (a) In the opinion of the directors, the financial statements of the company for the financial year ended 30 June 2018: i. comply with the International Financial Reporting Standards and give a true and fair view of the financial position of the company as at 30 June 2018 and of the performance and cash flows of the company for the year ended 30 June 2018; and ii have been prepared in accordance with the Companies Act, 2015; (b) The directors have received independence declaration by auditors as required by Section 395 of the Companies Act, 2015; and (c) At the date of this declaration, in the opinion of the directors, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. For and on behalf of the board and in accordance with a resolution of the board of directors. Dated this 15 th day of August Director Director 09

12 Tel: Fax: Offices in Suva and Lautoka BDO Chartered Accountants Level 10, FNPF Place 343 Victoria Parade GPO Box 855 Suva, Fiji RB PATEL GROUP LIMITED AUDITOR S INDEPENDENCE DECLARATION TO THE DIRECTORS OF RB PATEL GROUP LIMITED As auditor for the audit of RB Patel Group Limited for the financial year ended 30 June 2018, I declare to the best of my knowledge and belief, there have been: (a) (b) no contraventions of the auditor independence requirements of the Companies Act, 2015 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. Wathsala Suraweera Partner Suva, Fiji BDO CHARTERED ACCOUNTANTS 15 August 2018 BDO, Chartered Accountants, a Fiji Partnership, is a member firm of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 10

13 INDEPENDENT AUDITOR S REPORT To the Shareholders of RB Patel Group Limited Report on the Audit of the Financial Statements Opinion Tel: Fax: info@bdo.com.fj Offices in Suva and Lautoka BDO Chartered Accountants Level 10, FNPF Place 343 Victoria Parade GPO Box 855 Suva, Fiji We have audited the financial statements of RB Patel Group Limited (the company), which comprise the statement of financial position as at 30 June 2018, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the company as at 30 June 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting standards (IFRS). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISA). Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the company in accordance with the International Ethics Standards Board for Accountant s Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Fiji and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter Valuation of Investment Properties ($32,624,968) Refer to Note 14 to the Financial Statements. Valuation of investment properties is considered to be a key audit matter due to: the significance of the investment properties to the financial statements of the Company; How our audit addressed the matter Our audit procedures included: assessing the scope, expertise and independence of the external valuer used by the Company; 11 the nature of the properties which requires judgement by us to assess the appropriateness of the valuation methodology and inputs. The Company has appointed external valuer to assist in this process; and the low volume of comparable market transactions for properties available to corroborate valuation inputs and assumptions such as rents, yields, capitalization rates and discount rates. BDO, Chartered Accountants, a Fiji Partnership, is a member firm of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. evaluating the Company s process for reviewing and adopting the valuation by comparing to the Company s internal framework for assessing valuations; evaluating the appropriateness of the valuation methodology selected by valuer to determine the fair value of the properties to accepted market practices and our industry experience; and independently assessing the key inputs adopted by the valuer to available market transactions for similar properties and other comparable property classes.

14 INDEPENDENT AUDITOR S REPORT (Cont d) To the Shareholders of RB Patel Group Limited (Cont d) Key Audit Matters (Cont d) Key audit matter How our audit addressed the matter Changes in Accounting Policies in relation to early adoption of International Financial Reporting Standard (IFRS) 9 - Financial Instruments, IFRS 15 - Revenue from Contracts with Customers, and IFRS 16 Leases Changes in accounting policies in relation to early adoption of IFRS 9,15 and 16 is considered to be a key audit matter due to: Our audit procedures included: The significance of these three new standards to the overall financial reporting framework of the company including recognition, measurement/valuation, presentation and disclosures of key transactions and balances. The vast implications and adjustments in books as a result of first time adoption of these three standards in reporting overall financial position, performance and cash flows of the company compared to the earlier framework. The complexities involved in the first time adoption of the standards given the complex technicalities involved in the conceptual framework of each of the three standards. Involvement of significant assumptions and judgements in terms of applications of key principles of each of the three standards. Reviewing of management s analysis and assessments including reports of external advisors on impact assessment and calculations of relevant adjustments on first time adoption. Assessing the key assumptions and judgements made by the management in assessing the impact of each of the three standards. Evaluating and independently reviewing the methodologies used for the calculations relating to adjustment entries in terms of its reasonableness and compliance with the relevant standards. Assessing the conclusions made by the management and independent advisors on the applicability and relevance of certain principles of each of the standards to the company compared to its earlier accounting policies. Extensive disclosure requirements in the first time adoption. Verifying the adjustments made and entries processed in books based on the calculations of impact arising from each of the three standards to the opening balances of 1 July Reviewing and ensuring the adequacy of disclosures made in first time early adoption of the standards. Other Information The management and directors are responsible for the other information. The other information that we received comprises chairman s report, corporate governance statement, graphical analysis of financial data and listing requirements of South Pacific Stock Exchange included in the Annual Report of the company for the year ended 30 June 2018 but does not include the financial statements and the auditor s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. If, based upon the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 12

15 INDEPENDENT AUDITOR S REPORT (Cont d) To the Shareholders of RB Patel Group Limited (Cont d) Responsibilities of the Management and Directors for the Financial Statements The management and directors are responsible for the preparation and fair presentation of the financial statements in accordance with IFRS and the Companies Act 2015, and for such internal control as the management and directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the management and directors are responsible for assessing the company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management and directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. The management and directors are responsible for overseeing the company s financial reporting process. Auditor s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA will always detect a material misstatement when it exists. Misstatements can arise from fraud and error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with ISA, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 13

16 INDEPENDENT AUDITOR S REPORT (Cont d) To the Shareholders of RB Patel Group Limited (Cont d) Auditor s Responsibilities for the Audit of the Financial Statements (Cont d) Conclude on the appropriateness of the management s and directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company s ability to continue as a going concern. If we conclude that material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the financial statements or, if such disclosures, are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the management and directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the management and directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the management and directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 14

17 INDEPENDENT AUDITOR S REPORT (Cont d) To the Shareholders of RB Patel Group Limited (Cont d) Report on Other Legal and Regulatory Requirements In our opinion, the financial statements have been prepared in accordance with the requirements of the Companies Act 2015 in all material respects, and; a) we have been given all information, explanations and assistance necessary for the conduct of the audit; and b) the company has kept financial records sufficient to enable the financial statements to be prepared and audited.... BDO CHARTERED ACCOUNTANTS... Wathsala Suraweera Partner Suva, Fiji 15 August

18 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Note Revenue $ 121,589, ,761,900 Cost of sales (97,229,603) (96,056,854) Gross profit 24,359,790 23,705,046 Other income 6 3,258,147 3,093,419 27,617,937 26,798,465 Operating expenses (17,118,107) (16,403,926) Impairment loss on trade and other receivables (23,642) - Selling and marketing expenses (413,956) (415,712) Profit from operations 10,062,232 9,978,827 Finance income 7(a) 117,635 79,212 Finance costs 7(b) (932,585) (903,352) Change in fair value of investment properties 14 1,500, ,500 Profit before income tax 8 10,747,282 9,439,187 Income tax expense 9(a) (1,084,760) (957,354) Profit for the year 9,662,522 8,481,833 Other comprehensive loss Items that will not be reclassified to profit or loss: Equity investments at fair value through other comprehensive income change in fair value (450,000) - Total comprehensive income for the year $ 9,212,522 8,481,833 Dividends per share (including proposed dividends) cents 16 cents Basic & diluted earnings per share cents 28 cents The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 16

19 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 Note CURRENT ASSETS Cash on hand and at bank $ 294, ,474 Trade and other receivables 10 4,150,720 4,555,118 Inventories 11 13,932,116 14,511,814 Held-to-maturity investments 12(a) - 209,423 Current tax asset 9(b) 13,670 - Total current assets 18,390,583 19,449,829 NON-CURRENT ASSETS Available-for sale financial assets 12(c) - 505,000 Other investments 12(b) 421,202 - Equity investments 12(d) 55,000 - Property, plant and equipment 13 23,114,901 23,477,156 Investment properties 14 32,624,968 25,934,485 Right-of-use asset 15 3,086,338 - Deferred tax assets 9(c) 20,635 8,293 Advances , ,000 Total non-current assets 59,908,044 50,509,934 TOTAL ASSETS 78,298,627 69,959,763 CURRENT LIABILITIES Trade and other payables 16 11,545,246 9,243,058 Lease Liability ,674 - Interest bearing borrowings 17 9,380,603 12,403,650 Current tax liability 9(b) - 29,933 Provisions 18 61,719 33,246 Total current liabilities 21,411,242 21,709,887 NON-CURRENT LIABILITIES Interest bearing borrowings 17 8,415,825 7,106,415 Lease liability 15 2,733,970 - Deposits , ,092 Deferred tax liabilities 9(d) 2,671,759 2,492,558 Total non-current liabilities 14,099,052 9,874,065 TOTAL LIABILITIES 35,510,294 31,583,952 NET ASSETS 42,788,333 38,375,811 SHAREHOLDERS EQUITY Share capital 20 15,000,000 15,000,000 Investment revaluation reserve 51,230 51,230 Retained earnings 24,137,103 20,024,581 Proposed dividends 21 3,600,000 3,300,000 TOTAL SHAREHOLDERS EQUITY $ 42,788,333 38,375,811 The above statement of financial position should be read in conjunction with the accompanying notes. For and on behalf of the board and in accordance with a resolution of the board of directors Director Director

20 STATEMENT OF CHANGES IN EQUITY Share Investment Retained Proposed Total Capital Revaluation Earnings Dividends Reserve ($) ($) ($) ($) ($) Balance at 1 July ,000,000 51,230 16,342,748 3,300,000 34,693,978 Total comprehensive income Profit for the year - - 8,481,833-8,481,833 Other comprehensive income for the year Total comprehensive income - - 8,481,833-8,481,833 Transactions with owners of the company Dividends paid (note 21) - - (1,500,000) (3,300,000) (4,800,000) Proposed dividends (note 21) - - (3,300,000) 3,300,000 - Total transactions with owners of the company - - (4,800,000) - (4,800,000) Balance at 30 June ,000,000 51,230 20,024,581 3,300,000 38,375,811 Total comprehensive income Profit for the year - - 9,662,522-9,662,522 Other comprehensive loss for the year - - (450,000) - (450,000) Total comprehensive income - - 9,212,522-9,212,522 Transactions with owners of the company Dividends paid (note 21) - - (1,500,000) (3,300,000) (4,800,000) Proposed dividends (note 21) - - (3,600,000) 3,600,000 - Total transactions with owners of the company - - (5,100,000) 300,000 (4,800,000) Balance at 30 June ,000,000 51,230 24,137,103 3,600,000 42,788,333 The above statement of changes in equity should be read in conjunction with the accompanying notes. 18

21 STATEMENT OF CASH FLOWS Note Cash flows from operating activities Receipts from customers $ 124,650, ,011,837 Payments to suppliers and employees (109,965,043) (111,227,143) Cash generated from operations 14,685,051 11,784,694 Interest and other costs of finance (paid) / received, net (845,421) (824,060) Income tax paid (961,505) (887,367) Net cash provided by operating activities 12,878,125 10,073,267 Cash flows from investing activities Payment for property, plant and equipment and investment properties (6,074,661) (5,244,893) Proceeds from sale of property, plant and equipment 55,046 83,945 Dividends received 12,000 17,250 Payment for other investment (211,779) - Payment for held-to-maturity investment - (9,423) Advances to related party (253,556) (2,400,000) Repayment of advances from related parties 631,281 1,749,779 Net cash used in investing activities (5,841,669) (5,803,342) Cash flows from financing activities Proceeds from borrowings 4,600,562 1,058,236 Repayment of borrowings (3,789,000) (1,419,821) Payment for lease liability (402,216) - Dividends paid (4,800,000) (4,800,000) Net cash used in financing activities (4,390,654) (5,161,585) Net increase / (decrease) in cash and cash equivalents 2,645,802 (891,660) Cash and cash equivalents at the beginning of the financial year (6,531,176) (5,639,516) Cash and cash equivalents at the end of the financial year 25(a) $ (3,885,374) (6,531,176) The above statement of cash flows should be read in conjunction with the accompanying notes. 19

22 NOTES TO THE FINANCIAL STATEMENTS NOTE 1. GENERAL INFORMATION a) Corporate Information RB Patel Group Limited (the company) is a limited liability company incorporated and domiciled in Fiji. The company is listed on the South Pacific Stock Exchange. The address of its registered office and principal place of business is located at RB Patel CentrePoint Building, Ratu Dovi Road, Laucala Beach Estate, Nasinu. b) Principal Activities The principal activities of the company during the year were that of retailing and wholesaling of general merchandise, owners and administrators of properties and equity investments. The company operates supermarket stores in Nausori, Nakasi, Nasinu, Suva, Sigatoka, Nadi, Lautoka, Labasa and Lami. There were no significant changes in the nature of these activities during the financial year. NOTE 2. BASIS OF PREPARATION a) Basis of Preparation The financial statements of RB Patel Group Limited have been prepared on the basis of historical cost convention, except for the revaluation of financial assets, investment properties at fair value, and revaluation of certain non-current assets which were taken as deemed cost on transition to IFRS during the year ended 31 March Cost is based on the fair values of the consideration given in exchange for goods and services. In the application of IFRS, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Judgments made by management in the application of IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the future periods are disclosed, where applicable, in the relevant notes to the financial statements. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are critical to the financial statements are disclosed in note 5. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. b) Statement of Compliance The financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) and with the requirements of the Companies Act, c) Comparatives Where necessary, amounts relating to prior years have been reclassified to facilitate comparison and achieve consistency in disclosure with current year amounts. 20

23 NOTE 2. BASIS OF PREPARATION (CONT D) d) Changes in Accounting Policies Except for the changes below, the company has consistently applied the accounting policies to all periods presented in these financial statements. New Standards Applied by the Entity IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers, and IFRS 16 Leases. A. IFRS 9 - Financial Instruments The company has early adopted IFRS 9 Financial Instruments issued in July 2014 with a date of initial application of 1 July The requirements of IFRS 9 represent a significant change from IAS 39 Financial Instruments: Recognition and Measurement. The nature and effects of the key changes to the company s accounting policies resulting from its adoption of IFRS 9 are summarised below: As a result of the adoption of IFRS 9, the company adopted consequential amendments to IAS 1 Presentation of Financial Statements which requires impairment of financial assets to be presented in a separate line item in the statement of profit or loss and other comprehensive income (OCI). Previously, the company s approach was to include the impairment of trade receivables in operating expenses. Additionally, the company adopted consequential amendments to IFRS 7 Financial Instruments: Disclosures that are applied to disclosures about 2018 but generally have not been applied to comparative information. i. Classification of financial assets and financial liabilities IFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. IFRS 9 eliminates the previous IAS 39 categories of held to maturity, loans and receivables and available for sale. The impact of transition of instruments in these categories is detailed in note 3(e) and note 2(d)A(iv). For an explanation of how the company classifies and measures financial assets and accounts for related gains and losses under IFRS 9, refer Note 3(e). The adoption of IFRS 9 has not had a significant effect on the company s accounting policies for financial liabilities. ii. Impairment of financial assets 21 IFRS 9 replaces the incurred loss model in IAS 39 with an expected credit loss (ECL) model. The new impairment model applies to financial assets measured at amortised cost, contract assets, debt investments at FVOCI and loan commitments issued, but not to investments in equity instruments. Under IFRS 9, credit losses are recognised earlier than under IAS 39 refer Note 3(e). iii. Transition Changes in accounting policies resulting from the adoption of IFRS 9 (2014) have been applied retrospectively, except as described below: Comparative periods have not been restated. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of IFRS 9 are recognised in retained earnings and reserves as at 1 July Accordingly, the information presented for 2017 does not generally reflect the requirements of IFRS 9 and therefore is not comparable to the information presented for 2018 under IFRS 9.

24 NOTE 2. BASIS OF PREPARATION (CONT D) d) Changes in Accounting Policies (Cont d) A. IFRS 9 - Financial Instruments (Cont d) iii. Transition (Cont d) The following assessments have been made on the basis of the facts and circumstances that existed at the date of initial application: - The determination of the business model within which a financial asset is held. - The designation of investments in equity instruments not held for trading as at FVOCI. - If an investment in a debt security had low credit risk at the date of initial application of IFRS 9, then the company assumed that the credit risk on the asset had not increased significantly since its initial recognition. There has been no impact of transition to IFRS 9 on reserves and retained earnings at 1 July iv. Classification of financial assets and financial liabilities on the date of initial application of IFRS 9 The following table shows the original measurement categories under IAS 39 and the new measurement categories under IFRS 9 for each class of the company s financial assets and financial liabilities as at 1 July 2017: Note Original classification under IAS 39 New classification under IFRS 9 Original carrying amount under IAS 39 ($) New carrying amount under IFRS 9 ($) Financial assets Other investments 12(a) Held to maturity Amortised cost 209, ,423 Financial assets 12(c) Available-for-sale FVOCI 505, ,000 Trade and other Loans and receivables 10 receivables Amortised cost 4,555,118 4,555,118 Cash on hand and at Loans and bank receivables Amortised cost 173, ,474 Loans and Advances 10 receivables Amortised cost 585, ,000 Total financial assets 6,028,015 6,028,015 Financial liabilities Trade and other Other financial Other financial payables 16 liabilities liabilities 9,243,058 9,243,058 Interest bearing Other financial Other financial borrowings 17 liabilities liabilities 19,510,065 19,510,065 Total financial liabilities 28,753,123 28,753,123 The company s accounting policies on the classification of financial instruments under IFRS 9 are set out in Note 3(e). The application of these policies resulted in the reclassifications set out in the table above and explained below: 22

25 NOTE 2. BASIS OF PREPARATION (CONT D) d) Changes in Accounting Policies (Cont d) A. IFRS 9 - Financial Instruments (Cont d) iv. Classification of financial assets and financial liabilities on the date of initial application of IFRS 9 (Cont d) a. Equity securities represent investments that the company intends to hold for the long term for strategic purposes. As permitted by IFRS 9, the company has designated these investments at the date of initial application as measured at FVOCI. b. Trade and other receivables that were classified as loans and receivables under IAS 39 are now classified at amortised cost. c. Debt securities that were previously classified as held-to-maturity are now classified at amortised cost. The company intends to hold the assets to maturity to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on the principal amount outstanding. The following table reconciles the carrying amounts of financial assets under IAS 39 to the carrying amounts under IFRS 9 on transition to IFRS 9 on 1 July 2017: IAS 39 carrying amount at 30 June 2017 ($) Re- Classification ($) Re- Measurement ($) IFRS 9 carrying amount at 1 July 2017 ($) Financial assets Amortised cost Cash on hand and at bank Brought forward: Loans and receivables 173,474 Carried forward: Amortised cost 173,474 Trade and other receivables Brought forward: Loans and receivables 4,555,118 Carried forward: Amortised cost 4,555,118 Advances Brought forward: Loans and receivables 585,000 Carried forward: Amortised cost 585, Other investments Brought forward: Held to maturity 209,423 Carried forward: Amortised cost 209,423 Total amortised cost 5,523,015 5,523,015 FVOCI Equity investments Brought forward: Available for sale 505,000 Reclassified to: FVOCI equity 505,000 Total FVOCI 505, ,000 There has been no impact of transition to IFRS 9 on the opening ECL allowance determined in accordance with IFRS 9 as at 1 July 2017.

26 NOTE 2. BASIS OF PREPARATION (CONT D) d) Changes in Accounting Policies (Cont d) B. IFRS 16 - Leases The company has early adopted IFRS 16 Leases with a date of initial application of 1 July As a result, the company has changed its accounting policy for lease contracts as detailed below. The company applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 July The details of the changes in accounting policies are disclosed below. i. Definition of a lease Previously, the company determined at contract inception whether an arrangement is or contains a lease under IFRIC 4. Under IFRS 16, the company assesses whether a contract is or contains a lease based on the definition of a lease, as explained in Note 3(p). On transition to IFRS 16, the company elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after 1 July ii. As a lessee As a lessee, the company previously classified leases as operating lease or finance lease based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset. Under IFRS 16, the company recognises right-of-use assets and lease liabilities for all leases except for short term leases i.e. these leases are on statement of financial position. For leases of other assets, which were classified as operating under IAS 17, the company recognised right-of-use assets and lease liabilities with date of initial application of 1 July Leases classified as operating leases under IAS 17 At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at the company s incremental borrowing rate as at 1 July Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments. The company used the following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17. Excluded initial direct costs from measuring the right-of-use asset at the date of initial application. Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease 24

27 NOTE 2. BASIS OF PREPARATION (CONT D) d) Changes in Accounting Policies (Cont d) B. IFRS 16 - Leases (Cont d) III. As a lessor The company is not required to make any adjustments on transition to IFRS 16 for leases in which it acts as a lessor, except for a sub-lease. Under IFRS 16, the company is required to assess the classification of a sub-lease with reference to the right-of-use asset, not the underlying asset. On transition, the company reassessed the classification of a sub-lease contract previously classified as an operating lease under IAS 17. The company concluded that the sub-lease continues to be classified operating lease under IFRS 16 and thus there has been no impact on transition to IFRS 16 in relation to sub-lease. iv. Impacts on financial statements On transition to IFRS 16, the company recognised an additional $3,559,860 of right-of-use assets and $3,559,860 of lease liabilities, refer note 15. When measuring lease liabilities, the company discounted lease payments using its incremental borrowing rate at 1 July The weighted-average rate applied is 5%. Operating lease commitment at 30 June 2017 as disclosed in the company s financial statements (note 23(b)) Discounted using the incremental borrowing rate at 1 July 2017 Extension and termination options reasonably certain to be exercised Short term leases Lease liabilities recognised at 1 July 2017 (note 15) $ 2,591,406 (1,106,985) 3,177,360 (1,101,921) 3,559,860 C. IFRS 15 - Revenue from Contracts with Customers The company early adopted IFRS 15 Revenue from Contracts with Customers issued in May 2014 with a date of initial application of 1 July As a result, the company has changed its accounting policy for revenue recognition as detailed below. The company applied IFRS 15 using the cumulative effect method i.e. by recognising the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance of equity at 1 July Therefore, the comparative information has not been restated and continues to be reported under IAS 18 - Revenue and IAS 11 - Construction contracts. There was no quantitative impact of the changes in accounting policies from the adoption of IFRS Amendments to standards and annual improvements effective from 1 January 2017 A number of amendments to standards and annual improvements are effective for the first time for periods beginning on (or after) 1 January None of the amendments have a material effect on the company s annual financial statements. Amendment which is relevant to the entity is summarised below: IAS 7: Amendment Disclosure Initiative These amendments are effective from 1 January 2017 and aim to improve information about an entity s debt, including movements in that debt.

28 NOTE 2. BASIS OF PREPARATION (CONT D) d) Changes in Accounting Policies (Cont d) C. IFRS 15 - Revenue from Contracts with Customers (Cont d) IAS 7: Amendment Disclosure Initiative (Cont d) Disclosures are required to enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. New standards, amendments, annual improvements and interpretation that have been issued but are not mandatorily effective as at 30 June 2018 Certain new standards, amendments, annual improvements and interpretation which are not yet mandatorily effective and have not been adopted early in these financial statements, will or may have an effect on the company s future financial statements. The company intends to adopt these standards, amendments, annual improvements and interpretation if applicable, when they become effective. Amendment which is applicable to the entity is: IAS 40: Amendment Transfers of Investment Property This amendment is effective from 1 January 2018 and clarifies that transfer of a property to, or from investment property is made when, and only when, there is a change in use. Annual improvements and interpretation applicable to the entity are: Annual Improvements to IFRSs Cycle (IFRS 1 and IAS 28) effective from 1 January 2018 IFRS 1 A number of short term exemptions in IFRS 1 were deleted. The relief provided by these exemptions were no longer applicable. IFRIC Interpretation 22: Foreign Currency Transactions and Advance Consideration IFRIC interpretation 22 is effective from 1 January 2018 and addresses how to determine the date of transaction for the purpose of determining the spot exchange rate used to translate foreign currency transactions on initial recognition in circumstances when an entity pays or receives some or all of the foreign currency in advance of the recognition of the related asset, expense or income. NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Property, Plant and Equipment Property, plant and equipment are measured at cost and deemed cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition. Depreciation is provided on property, plant and equipment, including buildings and leasehold land but excluding freehold land. 26

29 NOTE 3. (a) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Property, Plant and Equipment (Cont d) Depreciation is calculated on a straight-line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight-line method. The estimated useful lives, residual values and depreciation method is reviewed at the end of each annual reporting period. Freehold land is not depreciated. Other property, plant and equipment is depreciated on a straight-line basis over its estimated useful life using the following rates: Leasehold lands Terms of leases Buildings 1.25% % Furniture, fittings and office equipment 12% - 40% Motor vehicles 18% Buildings on leasehold land are depreciated using the straight-line method over their estimated useful lives or the remaining period of the lease whichever is shorter. Profits and losses on disposal of property, plant and equipment are taken into account in determining the results for the year. Capital work in progress principally relates to costs incurred in respect of property construction. Capital work in progress is not depreciated. (b) Investment Properties Investment properties principally comprising freehold land, leasehold land and building are held to earn rentals and/or for capital appreciation, are measured initially at its cost including transaction costs. During prior years and until 30 June 2016, subsequent to initial recognition, investment properties were measured at its cost less any accumulated depreciation and accumulated impairment losses. Effective from 1 July 2016, investment properties are stated in the statement of financial position at fair values, less any subsequent impairment losses. Gains and losses arising from changes in the fair value of investment properties are included in the statement of profit or loss in the period in which they arise. Valuations are performed with sufficient regularity such that the carrying amounts do not differ materially from those that would be determined using fair values at the end of each reporting period. 27 Investment properties are derecognised when either it has been disposed or when the investment properties are permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are taken into consideration in determining the results for the period. (c) Impairment of Non - Financial Assets At each reporting date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. When it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

30 NOTE 3. (c) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Impairment of Non - Financial Assets (Cont d) Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit or loss immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized immediately in the statement of profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. (d) Inventories Inventories are valued at the lower of cost and net realisable value. Costs, including an appropriate portion of variable overhead expenses, are assigned to inventory on hand by the method most appropriate to each particular class of inventory, with the majority being valued on actual cost on first in first out basis. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Cost includes expenditure incurred in acquiring the inventories and bringing them to their existing condition and location. Provisions for inventory obsolescence are raised based on a review of inventories. Inventories considered obsolete or un-saleable are written off in the period in which they are identified. (e) (i) Financial Instruments Recognition and initial measurement Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price. 28

31 NOTE 3. (e) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Financial Instruments (Cont d) (ii) Classification and subsequent measurement Financial assets Policy applicable from 1 July 2017 On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI debt investment; FVOCI equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: it is held within a business model whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. On initial recognition of an equity investment that is not held for trading, the company may irrevocably elect to present subsequent changes in the investment s fair value in OCI. This election is made on an investment-by-investment basis. All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. On initial recognition, the company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Financial assets: Business model assessment Policy applicable from 1 July 2017 The company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes: the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets; how the performance of the portfolio is evaluated and reported to the company s management; the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; how managers of the business are compensated e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity. 29

32 NOTE 3. (e) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Financial Instruments (Cont d) (ii) Classification and subsequent measurement Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the company s continuing recognition of the assets. Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL. Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest Policy applicable from 1 July 2017 For the purposes of this assessment, principal is defined as the fair value of the financial asset on initial recognition. Interest is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In assessing whether the contractual cash flows are solely payments of principal and interest, the company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the company considers: contingent events that would change the amount or timing of cash flows; terms that may adjust the contractual coupon rate, including variable rate features; prepayment and extension features; and terms that limit the company s claim to cash flows from specified assets (e.g. non-recourse features). A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Financial assets: Reclassifications Policy applicable from 1 July 2017 Financial assets are not reclassified subsequent to their initial recognition, except in the period after the company changes its business model for managing financial assets. Financial assets: Subsequent measurement and gains and losses Policy applicable from 1 July 2017 Financial assets at amortised cost These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss. 30

33 NOTE 3. (e) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Financial Instruments (Cont d) (ii) Classification and subsequent measurement (Cont d) Financial assets Policy applicable before 1 July 2017 The company classifies its financial assets in the following categories: held-to-maturity investments, available-for-sale assets and loans and receivables. The classification depends on the nature and purpose for which the financial assets were acquired and is determined at the time of initial recognition. Held-to-maturity investments Non derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to- maturity when the company has the positive intention and ability to hold them to maturity. After initial measurement, held-to-maturity investments are measured at amortised cost using the effective interest rate (EIR) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance income in the statement of profit or loss. The losses arising from impairment are recognised in the statement of profit or loss as finance costs. Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting date. Investments are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the company has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at fair value. Changes in the fair value of monetary and non-monetary securities classified as available-for-sale financial assets are recognised in equity. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the statement of profit or loss as gains and losses from investment securities. Dividends on available-for-sale financial assets are recognised in the statement of profit or loss as part of other income when the company s right to receive payments is established. 31 The company assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the statement of profit or loss is removed from equity and recognised in the statement of profit or loss. Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance date, which are classified as non-current assets. The company s receivables comprise trade and other receivables disclosed in the statement of financial position (note 10). Bad debts are written off during the period in which they are identified.

34 NOTE 3. (e) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Financial Instruments (Cont d) (ii) Classification and subsequent measurement (Cont d) Financial assets Policy applicable before 1 July 2017 (Cont d) Loans and Receivables (Cont d) Trade receivables, loans, and other receivables are recorded at amortised cost less impairment. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment loss. An allowance for impairment loss of trade receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. Allowance is raised on a specific debtor level. Significant financial difficulties of the debtors and default or delinquency in payments are considered indicators that a specific debtor balance is impaired. Impairment assessed at a collective level is based on past experience and data in relation to actual write-offs. Subsequent recoveries of amounts previously written off are credited in the statement of profit or loss. (iii) Derecognition Financial assets The company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. The company enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised. Financial liabilities The company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The company also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value. On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss. (iv) Modifications of financial assets If the terms of a financial asset are modified, the company evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed to have expired. In this case, the original financial asset is derecognised (see (3(e)(iii))) and a new financial asset is recognised at fair value. 32

35 NOTE 3. (e) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Financial Instruments (Cont d) (iv) Modifications of financial assets (Cont d) Policy applicable from 1 July 2017 If the cash flows of the modified asset carried at amortised cost are not substantially different, then the modification does not result in derecognition of the financial asset. In this case, the company recalculates the gross carrying amount of the financial asset and recognises the amount arising from adjusting the gross carrying amount as a modification gain or loss in profit or loss. If such a modification is carried out because of financial difficulties of the borrower (see (3(f)),then the gain or loss is presented together with impairment losses. In other cases, it is presented as interest income (see (3(u)). Policy applicable before 1 July 2017 If the terms of a financial asset were modified because of financial difficulties of the borrower and the asset was not derecognised, then impairment of the asset was measured using the pre-modification interest rate (see (3(f). (iv) Offsetting Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. (f) Impairment of Financial Instruments Policy applicable from 1 July 2017 The company recognises loss allowances for ECLs on financial assets measured at amortised cost. No impairment loss is recognised on equity investment. The company measures loss allowances at an amount equal to lifetime ECL, except for the following, which are measured as 12-month ECL: debt securities that are determined to have low credit risk at the reporting date; and other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECL. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the company s historical experience and informed credit assessment and including forward-looking information. The company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. 33

36 NOTE 3. (f) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Impairment of Financial instruments (Cont d) Policy applicable from 1 July 2017 (Cont d) The company considers a financial asset to be in default when: the borrower is unlikely to pay its credit obligations to the company in full, without recourse by the company to actions such as realising security (if any is held); or the financial asset is more than 90 days past due. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12-months). The maximum period considered when estimating ECLs is the maximum contractual period over which the company is exposed to credit risk. Measurement of ECLs ECLs are a probability-weighted estimate of credit losses. They are measured as follows: financial assets that are not credit-impaired at the reporting date: as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the company expects to receive); and financial assets that are credit-impaired at the reporting date: as the difference between the gross carrying amount and the present value of estimated future cash flows. ECLs are discounted at the effective interest rate of the financial asset. Credit-impaired financial assets At each reporting date, the company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data: significant financial difficulty of the borrower or issuer; a breach of contract such as a default or being more than 90 days past due; the restructuring of a loan or advance by the company on terms that the company would not consider otherwise; it is probable that the borrower will enter bankruptcy or other financial reorganisation; or the disappearance of an active market for a security because of financial difficulties. Presentation of allowance for ECL in the statement of financial position Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the asset. 34

37 NOTE 3. (f) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Impairment of Financial instruments (Cont d) Policy applicable from 1 July 2017 (Cont d) Write-off The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the company s procedures for recovery of amounts due. Policy applicable before 1 July 2017 The company assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. The company considers a decline of 20% to be significant and a period of twelve months to be prolonged. If any such evidence exists for availablefor-sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss is removed from equity and recognised in profit or loss. Impairment losses recognised in profit or loss on equity instruments are not reversed through profit or loss. An allowance for impairment of receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit or loss as part of provision for doubtful debts. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against provision for doubtful debts in profit or loss. The company establishes an allowance for any doubtful debts based on a review of all outstanding amounts at year end. Bad debts are written off during the period when they are identified. (g) Cash and Cash Equivalents 35 For the purpose of statement of cash flows, cash and cash equivalents comprise cash on hand and cash in banks, net of outstanding bank overdrafts. Bank overdrafts are shown within interest bearing borrowings in current liabilities in the statement of financial position. (h) Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of profit or loss over the period of the borrowings using the effective interest method.

38 NOTE 3. (h) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Borrowings (Cont d) Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the balance date. (i) Trade and Other Payables Trade and other payables are recognised when the company becomes obliged to make future payments resulting from the purchase of goods and services. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. (j) Provisions Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that recovery will be received and the amount of the receivable can be measured reliably. (k) Employee Benefits Wages and salaries Liabilities for wages and salaries expected to be settled within 12 months of the reporting date are accrued up to the reporting date. Annual leave and sick leave The liability for annual leave is recognized in the provision for employee benefits. Liabilities for annual leave are expected to be settled within 12 months of the reporting date and are measured at their nominal values using the remuneration rate expected to apply at the time of settlement. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates prevailing at that time. Defined contribution plans Contributions to Fiji National Provident Fund are expensed when incurred. (l) Share Capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (m) Income Tax Income tax expense represents the sum of the tax currently payable and deferred tax. 36

39 NOTE 3. (m) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Income Tax (Cont d) Current Tax The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred Tax Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items. In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the periods when the asset and liability giving rise to them are realised or settled, based on tax rates and tax laws that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Current and Deferred Tax for the year Current and deferred tax is recognised as an expense or income in the statement of profit or loss, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity. Capital Gains Tax Capital Gains Tax (CGT) is applicable on capital gains realised on disposal of certain non-depreciable capital assets as set out in the Income Tax Act. Accordingly, where these capital assets are stated at fair value, a corresponding deferred tax liability is recognised on surplus / gain on valuation of nondepreciable capital assets at the rate of 10%. (n) Value Added Tax 37 Revenues, expenses, liabilities and assets are recognised net of the amount of Value Added Tax (VAT), except: i) where the amount of VAT incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or ii) for receivables and payables which are recognised inclusive of VAT. The amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

40 NOTE 3. (n) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Value Added Tax (Cont d) The VAT component of cash flows arising from operating and investing activities which is recoverable from or payable to, the taxation authority is classified as operating cash flows. (o) Foreign Currency Functional and Presentation Currency The company operates in Fiji and hence the financial statements are presented in Fiji dollars, which is the company s functional and presentation currency. Transactions and Balances All foreign currency transactions during the financial year are brought to account using the exchange rate in effect at the date of the transaction. Foreign currency monetary items at reporting date are translated at the exchange rate existing at reporting date. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Exchange differences are recognised in the statement of profit or loss in the period in which they arise. (p) Leases The company has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17 and IFRIC 4. The details of accounting policies under IAS 17 and IFRIC 4 are disclosed separately if they are different from those under IFRS 16 and the impact of changes is disclosed in Note 2(d). Policy applicable from 1 July 2017 At inception of a contract, the company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the company assesses whether: the contract involves the use of an identified asset this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; the company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and the company has the right to direct the use of the asset. The company has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the company has the right to direct the use of the asset if either: the company has the right to operate the asset; or the company designed the asset in a way that predetermines how and for what purpose it will be used. This policy is applied to contracts entered into, or changed, on or after 1 July At inception or on reassessment of a contract that contains a lease component, the company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. 38

41 NOTE 3. (p) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Leases (Cont d) Policy applicable from 1 July 2017 (Cont d) However, for the leases of land and buildings in which it is a lessee, the company has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component. Policy applicable as a lessee The company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company s incremental borrowing rate. Generally, the company uses its incremental borrowing rate as the discount rate. Lease payments included in the measurement of the lease liability comprise the following: fixed payments, including in-substance fixed payments; variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; amounts expected to be payable under a residual value guarantee; and the exercise price under a purchase option that the company is reasonably certain to exercise, lease payments in an optional renewal period if the company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the company is reasonably certain not to terminate early. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the company s estimate of the amount expected to be payable under a residual value guarantee, or if the company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-ofuse asset has been reduced to zero. The company presents right-of-use assets that do not meet the definition of investment property in property, plant and equipment and lease liabilities in the statement of financial position (refer note 15). 39

42 NOTE 3. (p) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Leases (Cont d) Short-term leases and leases of low-value assets The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term. Assets held under other leases were classified as operating leases and were not recognised in the company and the company s statement of financial position. Payments made under operating leases were recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received were recognised as an integral part of the total lease expense, over the term of the lease. Policy applicable as a lessor When the company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, the company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the company considers certain indicators such as whether the lease is for the major part of the economic life of the asset. When the company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a shortterm lease to which the company applies the exemption described above, then it classifies the sublease as an operating lease. If an arrangement contains lease and non-lease components, the company applies IFRS 15 to allocate the consideration in the contract. The company recognises lease payments received under operating leases as income on a straightline basis over the lease term as part of other income. The accounting policies applicable to the company as a lessor in the comparative period were not different from IFRS 16. However, when the company was an intermediate lessor the sub-leases were classified with reference to the underlying asset. Policy applicable before 1 July 2017 Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Company as Lessor Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Company as Lessee Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. 40

43 NOTE 3. (q) Revenue SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) The company applied IFRS 15 using the cumulative effect method and therefore the comparative information has not been restated and continues to be reported under IAS 18 and IAS 11. There was no quantitative impact of the changes in accounting policies from the adoption of IFRS 15. Policy Applicable from 1 July 2017 The company recognises revenue from selling goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Revenue is recognised at an amount that reflects the consideration that the company is expected to be entitled to in exchange for transferring goods or services to a customer, using a five-step model for each revenue stream as prescribed in IFRS 15. The five-step model is as follows: - Identification of the contract; - Identification of separate performance obligations for each good or service; - Determination of the transaction price; - Allocation of the price to performance obligations; and - Recognition of revenue. Revenue recognition with respect to the company s specific business activities are as follows: Sale of Goods The majority of the company s revenue is derived from selling goods with revenue recognised at a point in time when possession of the goods has transferred to the customer. This is generally when the goods are delivered to the customer. However, for export sales, control might also be transferred when delivered either to the port of departure or port of arrival, depending on the specific terms of the contract with a customer. There is limited judgement needed in identifying the point control passes: once physical delivery of the products to the agreed location has occurred, the company no longer has physical possession, usually will have a present right to payment (as a single payment on delivery) and retains none of the significant risks and rewards of the goods in question. Sales revenue represent revenue earned from the sale of merchandise and is stated net of returns, trade allowances and Value Added Tax. Rental Income Rental income is recognised on straight line basis over the lease term. Rental income represents income earned from renting out of building space and is stated net of Value Added Tax. Dividend Income 41 Dividend income from investments is recognised when the shareholder s right to receive payment is established. Interest Income Interest income is recognised on a time proportionate basis that takes into account the effective yield on the financial assets. Policy Applicable before 1 July 2017 Revenue is recognised when the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with goods and the

44 NOTE 3. (q) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Revenue (Cont d) Policy Applicable before 1 July 2017 (Cont d) amount of revenue can be measured reliably. Revenue is measured net of returns, trade discounts. For export sales risks and rewards are evaluated based on the shipping terms and conditions. (r) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use of sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in the statement of profit or loss in the period in which they are incurred. (s) Earnings Per Share Basic earnings per share Basic earnings per share (EPS) is determined by dividing profit after income tax attributable to members of the company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share Diluted EPS is the same as the basic EPS as there are no ordinary shares which are considered dilutive. (t) Dividend Distribution Dividend declared but not distributed is recognised as a liability in the company s financial statements in the period in which the dividend is declared by the company s directors. (u) Finance income and finance costs The company s finance income and finance costs include: interest income on advances; bank and loan administration charges; Interest expense on borrowings; impairment losses (and reversals) on investments in debt securities carried at amortised cost; and Interest expense on lease liabilities. Interest income or expense is recognised using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to: the gross carrying amount of the financial asset; or the amortised cost of the financial liability. In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis. 42

45 NOTE 3. (v) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT D) Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the company has access at that date. The fair value of a liability reflects its non-performance risk. When one is available, the company measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no quoted price in an active market, then the company uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction. If an asset or a liability measured at fair value has a bid price and an ask price, then the company measures assets and long positions at a bid price and liabilities and short positions at an ask price. The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price i.e. the fair value of the consideration given or received. If the company determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out. (w) Segment Reporting Operating Segment An operating segment is a component of the company which may earn revenue and incur expenses and the operating results are regularly reviewed by the directors of the company to make decisions about resources to be allocated to the segments and assess its performance. The company has identified supermarket segment and rental segment as two major reportable operating segments. 43 The accounting policies adopted for segment reporting are the same accounting policies adopted for preparing and presenting financial statements of the company. Geographic Segment A geographical segment constitutes the provision of products or services within a particular economic environment that are subject to risks and return that are different from those of segments operating in other economic environments. The company predominantly operates in Fiji and business from outside Fiji is not material. Accordingly, the company is in one geographical area for reporting purposes. The segment reporting has been disclosed under note 27.

46 NOTE 4. RISK MANAGEMENT 4.1 Financial risk factors The company s activities expose it to a variety of financial risks: market risk (foreign exchange risk and interest rate risk), credit risk and liquidity risk. The company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The company s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the company s financial performance. Risk management is carried out by executive management. Executive management identifies, evaluates and monitors financial risks in close co-operation with the operating units. The board provides policies for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity. (a) Market risk Market risk is the risk that changes in the market prices, such as foreign exchange rates, interest rate, equity prices, and credit spreads will affect the company s income or the value of its holdings of financial instruments. The objective of market risk management is to control market risk exposures within acceptable parameters while optimising the return on risk. Unfavourable changes to duty and tax regulations may expose the company to a decline in revenues. To minimise this risk, the company implements appropriate strategies to ensure that products and prices remain attractive. The company operates in Fiji and changes to Governments and the policies they implement affect the economic situation and ultimately the revenue of the company. To address this, the company reviews its pricing and product range regularly and responds appropriately to these changes. (i) Foreign exchange risk The company undertakes transactions denominated in foreign currencies. Consequently, exposures to exchange rate fluctuation. Exchange rate exposures are managed within approved policy parameters. Major foreign exchange transactions relates to importation of goods of which settlement is based on spot rates. Foreign currency risk arises from recognised assets and liabilities that are denominated in a currency that is not the company s functional currency (refer note 3(o)). As a measure, the company negotiates competitive rates with its bankers to minimise losses and maximise gains when foreign exchange receipts and payments become due. The carrying amount of the company s significant foreign currency denominated monetary liabilities (aggregating over $100,000) at the end of reporting period are as follows: Liabilities F$ F$ US Dollars 1,373, ,933 NZ Dollars 199, ,903 Changes in the exchange rate by 10% (increase and decrease) are not expected to have a significant impact on the net profit and equity balances currently reflected in the company s financial statements. 44

47 NOTE 4. RISK MANAGEMENT (CONT D) 4.1 Financial risk factors (Cont d) (a) (ii) Market risk (Cont d) Interest rate risk The company has significant interest-bearing borrowings. Borrowing from banks are at variable interest rates. This exposes the company to interest rate risk. These risks are managed closely by the directors and the management within the approved policy parameters. For additional borrowings, the company negotiates an appropriate interest rate with banks and other lenders with the board approval and borrows from banks and other financial institutions which offers the overall favourable terms, including the interest rate. Changes in the interest rate by 1% (increase and decrease) are not expected to have a significant impact on the net profit and equity balances currently reflected in the company s financial statements. The carrying amounts of the company s financial instruments that are exposed to interest rate risk as at 30 June 2018 and 2017 are summarized below: Financial Instruments Less than 1 year 1 year and over Total ($) ($) ($) At 30 June 2018 Financial liabilities: Bank overdraft 4,179,451-4,179,451 Bank loans 1,411,152 8,415,825 9,826,977 Advances 3,790,000-3,790,000 Total financial liabilities 9,380,603 8,415,825 17,796,428 At 30 June 2017 Financial liabilities: Bank overdraft 6,704,650-6,704,650 Bank loans 1,909,000 7,106,415 9,015,415 Advances 3,790,000-3,790,000 Total financial liabilities 12,403,650 7,106,415 19,510,065 Credit risk 45 Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. The company has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The company s exposure and the credit ratings of its counterparties are continuously monitored. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management on a regular basis. Trade accounts receivable consist of a large number of customers, spread across geographical areas. Ongoing credit evaluations are performed on the financial condition of accounts receivables. The company does not have any significant credit risk exposure to any single counterparty or any company of counterparties having similar characteristics. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the company s maximum exposure to credit risk.

48 NOTE 4. RISK MANAGEMENT (CONT D) 4.1 Financial risk factors (Cont d) ( b) Credit risk (Cont d) Impairment losses on financial assets recognised in profit or loss were as follows Impairment loss on trade and other receivables $ 23,642 - Trade and other receivables Expected credit loss assessment for trade and other receivables as at 1 July 2017 and 30 June 2018 The company uses an allowance matrix to measure the ECLs of Trade receivables from individual customers, which comprise a large number of small balances. Loss rates are calculated using a roll rate method based on the probability of a receivable progressing through successive stages of delinquency to write-off. The following table provides information about the exposure to credit risk and ECLs for Trade receivables from individual customers as at 30 June 2018: Gross Weighted- Carrying Loss average amount allowance Credit loss rate ($) ($) impaired 30 June 2018 Current (not past due) - 690, , days past due - 301, , days past due - 156, ,376 More than 90 days past due 28.86% 254,080 (73,321) 180,759 1,402,100 (73,321) 1,328,779 Loss rates are based on actual credit loss experience over the past two years. These rates are multiplied by scalar factors to reflect differences between economic conditions during the period over which the historic data has been collected, current conditions and the company s view of economic conditions over the expected lives of the receivables. Scalar factors are based on actual and forecast GDP. Movements in the allowance for impairment in respect of trade receivables The movement in the allowance for impairment in respect of trade receivables during the year was as follows. Comparative amounts for 2017 represent the allowance account for impairment losses under IAS Balance at 1 July per IAS 39 49,679 69,749 Adjustment on initial application of IFRS Balance at 1 July per IFRS 9 49,679 69,749 Amounts written off - - Net remeasurement of loss allowance 23,642 (20,070) Balance at 30 June $ 73,321 49,679 46

49 NOTE 4. RISK MANAGEMENT (CONT D) 4.1 Financial risk factors (Cont d) (b) Credit risk (Cont d) Cash on hand and at bank The company held cash of $294,077 at 30 June 2018 (2017: $173,474). Cash are held with bank and financial institution counterparties, which have sound credit ratings. The company considers that its cash have low credit risk based on the external credit ratings of the counterparties. On initial application of IFRS 9, the company recognised $Nil impairment allowance as at 1 July Debt securities The company limits its exposure to credit risk by investing only in liquid debt securities. The company monitors changes in credit risk by reviewing available press and regulatory information about issuers. Impairment on debt securities has been measured on the 12-month expected loss basis and reflects the short maturities of the exposures. The company considers that its debt securities have low credit risk based on the available press and regulatory information about issuers. The company did not have any debt securities that were past due but not impaired at 30 June An impairment allowance of $nil (2017:nil) in respect of debt securities and advances at amortised cost (2017: held to maturity and advances) was recognised. The company has no collateral in respect of these investments. (c) Liquidity risk Liquidity risk is the risk that the company will encounter difficulty in meeting obligations for its financial liabilities. Prudent and careful management of the company s liquidity position is essential in order to ensure that adequate funds are available to meet the company s ongoing financial obligations. The table below analyses the company s financial liabilities into relevant maturity groupings based on the remaining period at the balance date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows (excluding lease liabilities). Financial Liabilities Less than Between 1 Between 3 Over 5 Total 1 year and 2 years and 5 years years ($) ($) ($) ($) ($) At 30 June 2018 Bank loans 1,411,152 1,561,152 3,574,125 3,280,548 9,826,977 Advances 3,790, ,790,000 Bank overdraft 4,179, ,179,451 Trade and other payables 11,545, ,545,246 Lease liability 423, , ,159 1,826,462 3,157,644 At 30 June 2017 Bank loans 1,909,000 1,464,000 3,886,415 1,756,000 9,015,415 Advances 3,790, ,790,000 Bank overdraft 6,704, ,704,650 Trade and other payables 9,243, ,243,058 47

50 NOTE 4. RISK MANAGEMENT (CONT D) 4.1 Financial risk factors (Cont d) (c) Liquidity risk (Cont d) Contractual cash flows Non- derivative financial assets Carrying amount $ Total $ On demand $ Up to 1 year $ 1-2 years $ 2-5 years $ More than 5 years $ 30 June 2018 Other Investments 421, , ,202 - Financial Assets 55,000 55, ,000 Trade and other receivables 4,150,720 4,150,720-4,150, Cash at bank 294, , , Advances 585, , ,000 5,505,999 5,505, ,077 4,150, , , June 2017 Held-to-maturity 209, , , Available-for-sale 505, , ,000 Trade and other receivables 4,555,118 4,555,118-4,555, Cash at bank 173, , , Advances 585, , ,000 6,028,015 6,028, ,474 4,764, ,090,000 (d) (i) Other Risks Operational risk Operational risk is the risk of loss arising from systems failure, human error, and fraud to external events. When controls fail to perform, operational risks can cause damage to reputation, have legal or regulatory implications, or lead to financial crisis. The company cannot expect to eliminate all operational risk, but through a control framework and by monitoring and responding to potential risks, the company is able to manage risks. Controls include effective segregation of duties, access, authorisation and reconciliation procedures, staff education and assessment procedures. (ii) Regulatory risk The company s profitability can be impacted by regulatory agencies established which govern the business sector in Fiji. Specifically retail and wholesale prices of various products are regulated by the Fijian Competition & Consumer Commission. The salaries and wages payable to workers are subject to relevant wages regulations and employment legislation. 48

51 NOTE 4. RISK MANAGEMENT (CONT D) 4.2 Capital risk management The company s objectives when managing capital are to safeguard the company s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares and/or sell assets to reduce debt. The company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the statement of financial position) less cash and cash equivalents. Total capital is calculated as equity as shown in the statement of financial position plus net debt. The gearing ratios at 30 June 2018 and 2017 were as follows: Total borrowings (note 17) $ 17,796,428 19,510,065 Less: Cash on hand and at bank (294,077) (173,474) Net debt 17,502,351 19,336,591 Total equity 42,788,333 38,375,811 Total capital (Equity + Net debt) $ 60,290,684 57,712,402 Gearing ratio % (Net debt / Total capital) 29% 34% 4.3 Fair value estimation The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The carrying values of financial liabilities are estimated to approximate their fair values. NOTE 5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS In application of the company s accounting policies, which are described in note 3, the directors are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods. 49

52 NOTE 5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONT D) The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year and in future are discussed below. Critical Judgments in Applying the Entity s Accounting Policies (a) Fair Value Measurement of Investment Properties The company measures investment properties at fair value with changes in fair value being recognised in profit or loss. The company uses valuation techniques that include valuation assessment and estimates based on observable and unobservable market data and observable internal financial data to estimate the fair value of investment properties. Note 14 provides detailed information about the key assumptions used in the determination of the fair value of investment properties. The directors believe that the chosen valuation techniques and assumptions used are appropriate in determining the fair value of investment properties. (b) Provision for stock obsolescence Provision for stock obsolescence is assessed and raised on a specific basis based on a review of inventories. Inventory balances are reviewed continuously and inventories considered obsolete or non-saleable are written off in the period in which they are identified. The management s decision in maintaining provision for stock obsolescence requires judgment and estimates of future realisable values in relation to slow moving and old inventories. (c) Deferred tax liabilities Deferred tax liability is recognized on taxable temporary differences over accounting and tax carrying amounts in respect of company properties and is measured at the tax rates that are expected to apply in the period in which the liability is expected to be settled. The management s decision in recording its deferred tax liability requires significant judgment and estimates of future tax rates and future tax payables. Accordingly, subsequent events may result in outcomes that may be different from the judgments and estimates applied. (d) Depreciation of property, plant and equipment In relation to property, plant and equipment, the directors and the management apply judgment to determine the depreciation period based on the expected useful lives of the respective assets. Where estimated useful lives or recoverable values have diminished due to technological change or market conditions, depreciation is accelerated. The director s and management s assessment of useful lives or recoverable amount involves making a judgement, at the particular point in time, about inherent uncertain future outcomes of events or conditions. Accordingly, subsequent events may result in outcomes that are significantly different from assessment. NOTE 6. OTHER INCOME Rental revenue $ 3,077,866 2,929,001 Gain on disposal of plant and equipment 55,042 79,740 Dividends non related entity 12,000 17,250 Commission 40,862 5,090 Reversal of allowance for impairment loss - 20,070 Miscellaneous income 72,377 42,268 Total other income $ 3,258,147 3,093,419 50

53 NOTE 7. FINANCE COST / (INCOME) - NET (a) Finance income: Interest income on deposits and advances $ (117,635) (79,212) (b) Finance cost: Bank and loan administration charges 204, ,855 Interest expense - borrowings 559, ,497 Interest expense - lease liability 168,860 - Total finance costs 932, ,352 Borrowing costs amounting to $164,044 (2017: $18,481) was capitalized to investment properties (note 14). NOTE 8. PROFIT BEFORE INCOME TAX Profit before income tax has been arrived at after charging the following expenses: Auditor s remuneration for: - Audit fees 48,000 47,000 - Other services 34,230 7,400 Directors fees 50,000 28,000 Management fees 4,435,917 4,359,448 Depreciation of property, plant and equipment 1,115,242 1,032,095 Depreciation of leased properties 473,522 - Operating lease rental expenses 467,694 1,025,213 Personnel costs: - Salaries, wages, incentives and training levy 6,208,243 5,888,614 - FNPF contribution 611, ,112 NOTE 9. INCOME TAX (a) Income Tax Expense The prima facie tax payable on profit is reconciled to the income tax expense as follows: Profit before income tax 10,747,282 9,439,187 Prima facie tax thereon at 10% 1,074, , Tax effect of permanent differences: Non-deductible expenses 39,184 51,625 Non-taxable income (1,200) (1,725) Income tax deductions and concessions (35,302) (41,631) Under provision for income tax expense in prior year 7, Deferred capital gain tax liability on fair value gain on equity investments - 5,123 Income tax expense attributable to profit 1,084, ,354 Income tax expense comprises movements in: Current tax liabilities 917, ,851 Deferred tax liabilities 179, ,496 Deferred tax assets (12,342) 2,007 $ 1,084, ,354

54 NOTE 9. INCOME TAX (CONT D) (b) Current Tax Liability / (Asset) Balance at the beginning of the year $ 29, ,449 Income tax paid (961,505) (887,367) Over provision of income tax in the prior year 7, Income tax liability for the current year 910, ,808 Balance at the end of the year (13,670) 29,933 (c) Deferred Tax Assets Deferred tax assets comprise the estimated future benefit at future income tax rate of 10% of the following items: Difference between Right of Use Asset and Lease Liability 7,130 - Provision for employee entitlements 6,173 3,325 Allowance for impairment loss 7,332 4,968 Balance at the end of the year 20,635 8,293 (d) Deferred Tax Liabilities Deferred tax liabilities comprise the estimated expense at future income tax rate and capital gains tax rate of 10% of the following items: Difference in net carrying value of property, plant and equipment and investment properties for accounting and income tax purpose 2,624,516 2,466,493 Capital gains tax (at the rate of 10%) on the fair value gain on equity investments 5,123 5,123 Cyclone reserve deposit 42,120 20,942 Balance at the end of the year 2,671,759 2,492,558 NOTE 10. TRADE AND OTHER RECEIVABLES Current Trade receivables 1,402,100 1,313,924 Allowance for impairment loss (73,321) (49,679) 1,328,779 1,264,245 Other receivables (a) 1,731,966 2,034,585 Deposits 545, ,039 Prepayments 544, ,249 Total current trade and other receivables 4,150,720 4,555,118 Non Current Advances to Sunergise (Fiji) Limited (b) $ 585, ,000 52

55 NOTE 10. TRADE AND OTHER RECEIVABLES (CONT D) Trade receivables principally comprise amounts outstanding for sale of merchandise goods. Trade receivables are non-interest bearing and are generally settled on 7 60 days term (a) (b) Other receivables includes $1,279,240 (2017: $1,910,521) receivable from fellow subsidiary, Life Cinema Limited and $253,556 (2017: $nil) receivable from a director. Advance provided to Sunergise (Fiji) Limited is for funding of the installation of solar panel system at Lautoka, CentrePoint and HarbourPoint supermarkets and RB Patel JetPoint complex. The advance has been provided to obtain competitive electricity rates. The advance is subject to fixed interest rate for the first 5 years and thereafter, is subject to variable interest rate for the next 5 years. The advance is unsecured and the principal amount is repayable at the end of the term of 10 years. Ageing of past due but not impaired trade accounts receivable: days $ 301, , days 156,376 88,556 Over 90 days 180,759 44,696 Total past due unimpaired trade receivables 638, ,794 As of 30 June 2018 trade receivables of $73,321 (2017: $49,679) were considered impaired. The movement in allowance for impairment loss is as follows: Movement in the allowance for impairment loss: Balance at the beginning of the year 49,679 69,749 Impairment loss during the year 23,642 - Reversal of allowance for impairment loss - (20,070) Balance as at 30 June 73,321 49,679 NOTE 11. INVENTORIES Finished goods 12,107,151 13,270,964 Goods in transit 1,824,965 1,240,850 Total inventories 13,932,116 14,511,814 Finished goods are generally stated at cost. The value of inventories carried at net realisable values as at the year end is insignificant. Inventories considered to be un saleable or obsolete are written off in the period in which they are identified as un-saleable or obsolete. NOTE 12. (a) Current FINANCIAL ASSETS Held-to-Maturity Investments Cyclone reserve deposit Merchant Finance Limited $ - 209,423 53

56 NOTE 12. FINANCIAL ASSETS (CONT D) (b) Other Investments Non-Current Cyclone reserve deposit Merchant Finance Limited (at amortised cost) $ 421,202 - (c) Available-for-Sale Financial Assets Non-Current Equity investments in unlisted companies $ - 505,000 (d) Equity Investments Non-Current Equity investments in unlisted entities - at FVOCI 505,000 - Change in fair value (450,000) - Total equity investments, net 55,000 - Reconciliation for equity investments Opening balance 505,000 - Change in fair value (450,000) - Total equity investments, net $ 55,000 - Equity securities designated as at FVOCI At 1 July 2017, the company designated the investments shown above as equity securities as at FVOCI because these equity securities represent investments that the company intends to hold for the long-term for strategic purposes. In 2017, these investments were classified as available-for-sale see Note 2(d)(A)(iv)(a). Dividend income recognised during the year is disclosed in Note 6. No strategic investments were disposed off during 2018, and there were no transfers of any cumulative gain or loss within equity relating to these investments. 54

57 NOTE 13. PROPERTY, PLANT AND EQUIPMENT Freehold land at deemed cost ($) Leasehold land at deemed cost ($) Buildings at deemed cost ($) Office equipment at cost ($) Motor vehicles at cost ($) Capital Work in progress ($) Total ($) Gross carrying amount Balance at 1 July ,215,409 2,056,199 20,600,790 6,930,193 1,399,378 5,652 37,207,621 Additions , ,318-1,177,883 Disposals (132,499) - (132,499) Transfer to investment properties (note 14) (1,201,240) (183,402) (2,564,867) (3,949,509) Balance at 30 June ,014,169 1,872,797 18,035,923 7,499,758 1,875,197 5,652 34,303,496 Additions , , ,992 Disposals (226,883) - (226,883) Balance at 30 June ,014,019 1,872,797 18,035,923 8,082,655 1,818,409 5,652 34,829,605 Accumulated depreciation Balance at 1 July ,725 3,211,560 5,344,061 1,011,360-10,117,706 Depreciation expense - 32, , , ,050-1,032,095 Disposals (128,295) - (128,295) Transfer to investment properties note 14) - (34,217) (160,949) (195,166) Balance at 30 June ,471 3,312,188 5,887,566 1,077,115-10,826,340 Depreciation expense - 32, , , ,513-1,115,242 Disposals (226,878) - (226,878) Balance at 30 June ,433 3,573,765 6,458,756 1,099,750-11,714,704 Net book value As at 30 June ,014,169 1,323,326 14,723,735 1,612, ,082 5,652 23,477,156 As at 30 June ,014,169 1,290,364 14,462,158 1,623, ,659 5,652 23,114,901 Prior to April 2006, land and buildings were revalued by the directors based on independent valuation. Upon adoption of IFRS (effectively from April 2006), the company had elected the option provided under IFRS 1 to apply the cost model (deemed cost) for land and buildings previously re-valued, and accordingly, the cost value of land and buildings include revaluation increments amounting to $2,637,335. In accordance with the security arrangements for borrowings from the bank, these properties have been pledged as security (refer note 17). NOTE 14. INVESTMENT PROPERTIES Freehold land ($) Leasehold land ($) Buildings ($) Work in progress ($) Total ($) 55 Gross carrying amount Balance at 1 July 2016 at fair value 4,648,760 1,800,815 11,346, ,902 18,614,558 Transfer from property, plant and equipment 1,201, ,185 2,403,919-3,754,344 Additions - 5,500-3,275,583 3,281,083 Change in fair value 340,000 34,500 (90,000) - 284,500 Balance at 30 June ,190,000 1,990,000 13,660,000 4,094,485 25,934,485 Additions ,190,483 5,190,483 Change in fair value 670, , ,000-1,500,000 Balance at 30 June ,860,000 2,120,000 14,360,000 9,284,968 32,624,968

58 NOTE 14. INVESTMENT PROPERTIES (CONT D) During prior years and until 30 June 2016, subsequent to initial recognition, investment properties were measured at its cost less any accumulated depreciation and accumulated impairment losses. Effective from 1 July 2016, investment properties are stated in the statement of financial position at fair values, less any subsequent impairment losses. An independent valuation was carried out by registered valuer, Rolle Associates, in June 2018 for investment properties of the company to assess the fair values of the properties. The directors and management work closely with the external valuer to establish the appropriate valuation techniques and inputs to the valuation model. The valuation methodologies adopted by the valuer were Summation Method and Sales Comparison Method. The excess market value over book value of $1,500,000 has been recorded as an increase in fair value to investment properties in the financial statements for the year ended 30 June 2018, based on management and directors assessment of fair values and taking into consideration the recent valuations by registered valuer Rolle Associates. Furthermore, fair value gain on investment properties amounting to $1,500,000 has been recorded in statement of profit or loss and deferred tax liability of $150,000 has been recorded in statement of financial position for the year ended 30 June In accordance with the security arrangements for borrowings from the bank, these investment properties have been pledged as security (refer note 17). Borrowing costs amounting to $164,044 (2017: $18,481) in relation to the construction of the JetPoint Carpark Building in Martintar, Nadi was capitalized to investment properties. NOTE 15. LEASES (a) As a lessee The company leases land and building. Information about leases for which the company is a lessee is presented below: Right-of-use assets Balance at 1 July 2017 $ 3,559,860 - Depreciation charge for the year 473,522 - Balance at 30 June ,086,338 - Additions to the right-of-use assets during 2018 were $nil. Lease liabilities Maturity analysis contractual undiscounted cash flows Less than one year 571,933 - One to five years 1,371,476 - More than five years 2,164,475 - Total undiscounted lease liabilities at 30 June ,107,884 - Lease liabilities included in the statement of financial position at 30 June 2018 Current 423,674 - Non-current 2,733,970 - $ 3,157,644-56

59 NOTE 15. LEASES (CONT D) (a) As a lessee (cont d) Amounts recognised in profit or loss Interest on lease liabilities $ 168,860 - Variable lease payments not included in the measurement of lease liabilities 467,694 - Amounts recognised in the statement of cash flows 636,554 - Total cash outflow for leases 402,216 - Real estate leases The company leases land and buildings for its retail stores. The leases of retail stores typically run for a period of twelve to twenty years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term. Some leases provide for additional rent payments that are based on changes in local price indices. The company sub-leases some of its properties under operating leases. Extension options Some leases of retail stores contain extension options exercisable by the company up to one year before the end of the non-cancellable contract period. Where practicable, the company seeks to include extension options in new leases to provide operational flexibility. The extension options held are exercisable only by the company and not by the lessors. The company assesses at lease commencement whether it is reasonably certain to exercise the extension options. The company reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant change in circumstances within its control. (b) As a lessor Lease income from lease contracts in which the company acts as a lessor is as below: Operating lease Lease income $ 3,077,866 2,929,001 Operating lease The company leases out its investment property. The company has classified these leases as operating leases, because they do not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Note 14 sets out information about the operating leases of investment properties. Note 23(d) sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date. 57

60 NOTE 16. TRADE AND OTHER PAYABLES Trade payables $ 8,468,781 6,453,984 Other payables (a) 2,916,265 2,458,736 VAT payable 149, ,408 Dividends payable 10,930 10,930 11,545,246 9,243,058 Trade payables principally comprise amounts outstanding for trade purchases and on-going costs. Trade payables are non-interest bearing and are normally settled on days term. (a) Other payables includes $1,486,850 (2017: $1,421,743) payable to the holding company. NOTE 17. INTEREST BEARING BORROWINGS Current Bank overdrafts 4,179,451 6,704,650 Bank Loan ANZ Banking Group Limited (a) - 685,000 Bank Loan ANZ Banking Group Limited (b) - 480,000 Bank Loan ANZ Banking Group Limited (c) 504, ,000 Bank Loan - ANZ Banking Group Limited (d) 457, ,000 Bank Loan Westpac Banking Corporation (e) 450,000 - Advance from Fijian Holdings Unit Trust (f) 3,040,000 3,040,000 Advance from Fiji Television Limited (g) 750, ,000 Total current borrowings 9,380,603 12,403,650 Non-Current Bank Loan ANZ Banking Group Limited (b) - 2,120,000 Bank Loan ANZ Banking Group Limited (c) 3,068,000 3,572,000 Bank Loan ANZ Banking Group Limited (d) 4,058,046 1,414,415 Bank Loan Westpac Banking Corporation (e) 1,289,779 - Total non-current secured borrowings $ 8,415,825 7,106,415 Reconciliation of movement of liabilities to cash flows from financing activities Borrowings $ Lease liabilities $ Total $ Balance at 1 July ,805,415 3,559,860 16,365,275 Changes from financing cash flows Repayment of borrowings (3,789,000) - (3,789,000) Proceeds from borrowings 4,600,562-4,600,562 Payment of lease liabilities - (402,216) (402,216) Total changes from financing cash flows 13,616,977 3,157,644 16,774,621 Other changes Liability related Interest expense 559, , ,091 Interest paid (559,231) (168,860) (728,091) Total liability related other changes Balance at 30 June ,616,977 3,157,644 16,774,621 58

61 NOTE 17. INTEREST BEARING BORROWINGS (CONT D) (a) (b) (c) (d) (e) (f) (g) The loan had been taken for construction of RB Patel JetPoint complex and purchase of land in Nadi. The loan was subject to variable interest rate. Bank loan was payable at monthly repayments of $86,000 plus interest. The loan was fully repaid during the year. The loan had been taken for construction of RB Patel HarbourPoint complex in Lami. The loan was subject to variable interest rate. Bank loan was payable at monthly repayments of $40,000 plus interest. The loan was fully repaid during the year. The loan has been taken for construction of Cinema Multiplex at JetPoint complex in Martintar, Nadi. The loan is subject to variable interest rate. Bank loan is payable at monthly repayments of $42,000 plus interest. The loan has been taken for construction of Carpark and Retailing complex at JetPoint complex in Martintar, Nadi. The loan is subject to variable interest rate. Bank loan is payable at monthly repayments of $38,096 plus interest. The loan has been taken for construction of Apartment complex in Clarke Street, Suva. The loan is subject to variable interest rate. Bank loan is payable at monthly repayments of $50,000 plus interest. Advance from Fijian Holdings Unit Trust, managed by fellow subsidiary company, Fijian Holdings Trust Management Limited, is subject to interest at a competitive rate, unsecured and is repayable on demand. Advance from Fiji Television Limited, a fellow subsidiary company, is subject to interest at a competitive rate, unsecured and is repayable on demand. Particulars relating to secured borrowings: The bank overdraft facility and bank loans (together with letter of credit and guarantee facilities) from ANZ Banking Group Limited is secured by: 1) First registered mortgage debenture given by the company over all its present and future assets and undertakings and its uncalled and unpaid capital, stamped to $20 million. ii) First registered mortgage over properties (CT No ) situated at corner of Dovi Road and Ratu Mara Road, Laucala Beach Estate, Nasinu, (CT No. 7082) situated at Martintar, Nadi, (CT No ) situated at Tavewa Avenue, Lautoka, (CL No ) situated at Tavewa Avenue, Lautoka and (CT No ) situated at Queens Road, Lami. 59 iii) iv) A Deed of Pari Passu between the ANZ Banking Group Limited, Westpac Banking Corporation and the company, regarding sharing of securities in the ratio 50/50 with maximum debt of $6 million each. Deed of Variation of Pari Passu between the ANZ Banking Group Limited, Westpac Banking Corporation and the company, increasing maximum debt to $6 million each. The bank overdraft facility and bank loan (together with letter of credit and guarantee facilities) from Westpac Banking Corporation is secured by: i) Registered equitable mortgage debenture given by the company over all its assets and undertakings including its uncalled and called but unpaid capital.

62 NOTE 17. INTEREST BEARING BORROWINGS (CONT D) ii) iii) A Deed of Pari Passu between Westpac Banking Corporation, ANZ Banking Group Limited and the company, regarding sharing of securities in the ratio 50/50 with maximum debt of $7 million each. Registered first mortgage over properties (CL No. 2843) situated at the corner of Kings & Adi Davila Roads, Nakasi, Nausori, (CL No. 4825) situated at Clarke Street, Suva and (NL No ) situated at Nasekula Road, Labasa. The company did not have any defaults of principal or interest or other breaches with respect to its borrowings during the years ended 30 June 2018 and NOTE 18. PROVISIONS Employee benefits $ 61,719 33,246 NOTE 19. DEPOSITS Deposits from tenants 277, ,092 NOTE 20. SHARE CAPITAL Issued and paid up capital 30,000,000 ordinary shares 15,000,000 15,000,000 Fully paid ordinary shares carry one vote per share and carry the right to dividends. There has been no movement in share capital during the year. NOTE 21. DIVIDENDS PAID, DECLARED OR PROPOSED Interim dividend paid - 5 cents per share (2017: 5 cents) 1,500,000 1,500,000 Final interim dividend proposed - 12 cents per share (2017: declared - 11 cents) 3,600,000 3,300,000 $ 5,100,000 4,800,000 Dividends per share 17 cents 16 cents NOTE 22. EARNINGS PER SHARE Basic and Diluted Earnings Per Share The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share are as follows: Operating profit after tax attributable to members 9,662,522 8,481,833 Weighted average number of ordinary shares for the purposes of basic earnings per share 30,000,000 30,000,000 Basic and diluted earnings per share 32 cents 28 cents 60

63 NOTE 23. COMMITMENTS (a) Capital Expenditure Commitments Capital expenditure commitment is in respect to the construction of the Carpark and Retailing Complex in Martintar, Nadi and construction of residential apartments in Clarke Street, Suva Approved by the board and committed $ 15,407,213 5,636,644 (b) Operating Lease Expenses The company has classified the short term leases as operating leases because they do not transfer substantially all risks and rewards incidental to the ownership of the assets. The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be paid after the reporting date: Non-cancellable operating lease payables Not later than one year 184, ,996 Two to three years - 870,996 Three to four years - 658,998 Four to five years - 105,415 Total undiscounted lease payments 184,000 2,591,406 (c) Management Fees The management fees is payable to FHL Retailing Limited (holding company), pursuant to Management Agreement dated 10 June 1999 and was for an initial period of 15 years effective from 1 April 1999 with option to renew for another 15 years. Upon expiry of the initial term of the management agreement in April 2015, the company renewed the management agreement for a further 15 years. The basis for computation of management fees has been disclosed under note 26 (e). (d) Operating Lease Income Operating lease income relates to rental income from building spaces rented out. Non-cancellable operating lease receivables Not later than one year 3,067,018 3,122,686 Later than one year but not later than five years 4,103,895 5,938,205 Later than five years 2,371,276 3,769,109 Total future rental income 9,542,189 12,830,000 NOTE 24. Contingent Liabilities CONTINGENCIES Letters of credit 299,567 6,358 Indemnity guarantees 111, ,578 Total contingent liabilities $ 411, ,936 61

64 NOTE 25. NOTES TO THE STATEMENT OF CASH FLOWS (a) Reconciliation of Cash and Cash Equivalents For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Cash on hand and at bank $ 294, ,474 Bank overdraft (4,179,451) (6,704,650) Total cash and cash equivalents (3,885,374) (6,531,176) (b) Financing Facilities Fully committed bank overdraft financing facilities available to the company at year end were as follows: Bank overdraft utilised 4,179,451 6,704,650 Bank overdraft unutilised 7,622,549 5,097,350 $ 11,802,000 11,802,000 NOTE 26. RELATED PARTY DISCLOSURES (a) Holding company and Ultimate Holding company The holding company is FHL Retailing Limited, a company incorporated in Fiji. The ultimate holding company is Fijian Holdings Limited, a company incorporated in Fiji and listed on the South Pacific Stock Exchange. (b) Directors The names of persons who were directors of the company at any time during the year are as follows: Iowane Naiveli Chairman Nouzab Fareed Malakai Naiyaga Surendra K Patel Kaliopate Tavola Litiana Loabuka (c) Amounts due to and Receivable from Related Parties Appropriate disclosure of these amounts is contained in the respective notes to the financial statements. (d) Transactions with Related Parties Significant transactions (transaction value of over $25,000) with related parties during the year ended 30 June 2018 and 2017 with approximate transaction values are summarized as follows: 62

65 NOTE 26. RELATED PARTY DISCLOSURES (CONT D) (d) Transactions with Related Parties (Cont d) Related Party Relationship Nature of transaction ($) ($) FHL Retailing Limited Holding company Management fees 4,435,917 4,359,448 Fijian Holdings Unit Trust Unit Fund managed by Interest expense 97, ,400 fellow subsidiary company, Fijian Holdings Trust Management Limited Fiji Television Limited Fellow subsidiary Advertising expense 90,262 71,560 Basic Industries Limited Fellow subsidiary Purchase of materials 1,295, ,176 Basic Industries Limited Fellow subsidiary Sales 142,555 - Merchant Finance Limited Fellow subsidiary Term deposit 200,000 - Marsh Limited Shareholder Related Entity Gross insurance premium 391, ,178 Life Cinema Limited Fellow subsidiary Rent income 276, ,000 Life Cinema Limited Fellow subsidiary Sales 321, ,536 Life Cinema Limited Fellow subsidiary Administration fee 48,000 24,000 Life Cinema Limited Fellow subsidiary Interest income 36,000 24,010 Life Cinema Limited Fellow subsidiary Advances given - 2,400,000 Life Cinema Limited Fellow subsidiary Advances repaid 631,281 1,500,000 In addition, during the year, the company had paid and recharged expenses in relation to purchase of equipment, administration and operating expenses for Life Cinema Limited amounting to $nil (2017: $3,791,197). (e) Management Fees Management fees expense of $4,435,917 (2017: $4,359,448) was incurred for the year and was paid /payable to FHL Retailing Limited. The management fees is payable pursuant to Management Agreement dated 10 June Upon expiry of the initial term of the management agreement in April 2015, the company renewed the management agreement for a further 15 years. The Management Agreement provides for management fees based on turnover of the company and incentive fees based on the level of profit before income tax. FHL Retailing Limited has engaged Tui Management Consulting LP of New Zealand (a firm owned by director Surendra Patel and other RB Patel family members) for the provision of consultancy services in relation to daily operation of RB Patel Group Limited. (f) Key Management Personnel Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. 63

66 NOTE 26. RELATED PARTY DISCLOSURES (CONT D) (f) Key Management Personnel (Cont d) During the year, Chief Operating Officer, General Manager, Group Purchasing Officer and Financial Controller were identified as key management personnel, with the greatest authority and responsibility for the planning, directing and controlling the activities of the company. The remuneration of the key management personnel during the year was as follows: ($) ($) Salaries and other benefits 474, ,396 Furthermore, management fees was paid for the management services obtained during the year (refer note 26 (e)). FHL Retailing Limited has engaged Tui Management Consulting LP of New Zealand (a firm owned by director Surendra Patel and other RB Patel family members) for the provision of consultancy services in relation to daily operation of RB Patel Group Limited. (g) Key Management Personnel Equity Holdings Fully paid ordinary shares of RB Patel Group Limited Direct interest in the share capital of the company by the key management personnel and executive directors is $Nil (2017: $Nil). Directors Fees Directors fees of $50,000 (2017: $28,000) was paid to the non-executive directors. NOTE 27. SEGMENT INFORMATION Supermarket ($) Rental ($) Total ($) 30 June 2018 Sales and other revenue 121,769,674 3,077, ,847,540 Segment results 7,767,435 2,924,805 10,692,240 Gain on disposal of assets 55,042-55,042 Profit before income tax 10,747,282 Income tax expense (1,084,760) Profit after income tax 9,662,522 Assets Segment non-current assets 26,201,239 32,624,968 58,826,207 Other non current assets 1,081,837 Total non-current assets 59,908,044 64

67 NOTE 27. SEGMENT INFORMATION (CONT D) Supermarket ($) Rental ($) Total ($) 30 June 2017 Sales and other revenue 119,926,318 2,929, ,855,319 Segment results 7,664,884 1,694,563 9,359,447 Gain on disposal of assets 79,740-79,740 Profit before income tax 9,439,187 Income tax expense (957,354) Profit after income tax 8,481,833 Assets Segment non-current assets 23,477,156 25,934,485 49,411,641 Other non current assets 1,098,293 Total non-current assets 50,509,934 Segment Assets and Liabilities Current assets and current and non-current liabilities cannot be reasonably allocated between operating segments. Accordingly, this information has not been provided under segment information. Non-current assets noted above under Rental are those stated as Investment Properties in Note 14 and relate to buildings that are exclusively rented to third parties. Properties where supermarkets are operated together with part of the buildings rented to third parties have not been able to be reasonably allocated between operating segments. Accordingly, this information has not been provided under segment information. NOTE 28. EVENTS SUBSEQUENT TO BALANCE DATE No matter or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the company, the results of those operations, or the state of affairs of the company in future financial years. NOTE 29. APPROVAL OF FINANCIAL STATEMENTS The financial statements were approved by the board of directors and authorised for issue on 15 August

68 ADDITIONAL INFORMATION SPSE LISTING RULES INFORMATION (NOT INCLUDED ELSEWHERE IN THE ANNUAL REPORT) 1. Shareholding: a. As at 30 June 2018, directors held direct interest of 155 shares and indirect interest of 7,650 shares of the company. b. Distribution of shareholding: Holding No. of Holders Total % Holding shares % 501 to 5,000 shares % 5,001 to 10,000 shares % 10,001 to 20,000 shares % 20,001 to 30,000 shares % 30,001 to 40,000 shares ,001 to 50,000 shares % 50,001 to 100,000 shares % 100,001 to 1,000,000 shares % Over 1,000,000 shares % Total % c. Top 20 shareholders Name No. of shares 1. FHL Retailing Limited 15,223, itaukei Trust Fund Board 4,000, Fiji National Provident Fund 2,847, BSP Life (Fiji) Limited 2,164, Unit Trust of Fiji (Trustee Co) Limited 1,130, FHL Trustees Limited ATF Fijian Holdings Unit Trust 964, FHL Media Limited 895, Kirit Patel 400, Mahendra Patel 220, Kishori Patel 200, Kanu Patel 200, Vinod Patel 200, J.P Bayly Trust 110, Moala Tikina Council 100, Chiman Bhai F/N Hirabhai Patel 96, FijiCare Insurance Limited 62, Pushpa Wati Kapadia 51, Punja & Sons Limited 50, Vikram Patel 50, Radike Qereqeretabua OF 30, Tappoo Limited 30,000 66

69 ADDITIONAL INFORMATION SPSE LISTING RULES INFORMATION (NOT INCLUDED ELSEWHERE IN THE ANNUAL REPORT) 2. Share Price details: Highest share price during year was $4.85. Lowest share price during year was $3.29. Share price at year end was $ Attendance at Board Meetings: Name No of Meeting No Attended Surendra K Patel 5 5 Iowane Naiveli 5 5 Nouzab Fareed 5 5 Malakai Naiyaga 5 4 Kaliopate Tavola 5 4 Litiana Loabuka Attendance at Subcommittee Meetings Name No of Meetings No Attended Audit & Risk Committee Malakai Naiyaga (Chairperson) 2 2 Nouzab Fareed 2 2 Saleshni Prasad 2 2 Human Relations Committee Litiana Loabuka (Chairperson) 1 1 Kaliopate Tavola 1 1 Abilash Ram Share Register Central Share Registry Limited Level 2, Plaza 1 FNPF Boulevard 33 Ellery Street Suva 67

70 ADDITIONAL INFORMATION SPSE LISTING RULES INFORMATION (NOT INCLUDED ELSEWHERE IN THE ANNUAL REPORT) (Restated) $ $ $ $ $ Revenue Sales and Other Income 124,847, ,855, ,672, ,449, ,706,632 Profit before Depreciation and Tax 12,336,046 10,471,282 9,360,090 7,661,874 7,014,308 Depreciation 1,588,764 1,032,095 1,150,457 1,079,829 1,095,182 Income Tax Expense / (Benefit) 1,084, , , ,726 (8,426) Profit after Tax 9,662,522 8,481,833 7,351,154 5,919,319 5,927,552 Earnings per Share Dividends per Share (including proposed dividends for year ended 30 June 2017) Total Liabilities 35,510,294 31,583,952 31,410,290 28,462,184 28,148,877 Total Assets 78,298,627 69,959,763 66,104,268 55,359,143 53,326,517 Net Asset backing per Share Shareholders Equity 42,788,333 38,375,811 34,693,978 26,896,959 25,177,640 68

71 GRAPHICAL ANALYSIS OF FINANCIAL DATA Revenue: Comparison of revenue including other income Earnings per share The trend for the company s Profit after tax divided by the total number of shares. Profit after Tax The trend in Profit after tax. Gearing Ratio Company s total borrowing as a percentage of shareholders equity indicating its ability to continue as a going concern and provide returns to shareholders while maintaining an optimal capital structure. Percentage of Profits Distributed as Dividend The trend for percentage of profit distributed as dividends. Share price movements Company s quarterly share price on the SPSE from

72 NOTES 70

73 NOTES 71

74